Subscribe    |    Sponsors    |    About Us   |   Contact Us                

Journal Home
BPO Journal
Current Issue
Back Issues

Table of Contents

Insights
Accountability Helps Turn Lead Into Gold

Case Study
A Ship Shape Outsourcing Relationship

Giving IT Capabilities Some Real Structure

Netsourcing: the Life Blood of an ISO

Supplier Voice
Curing Health Plan Ills

Measuring Quality, Not Quantity

Hatching An Application

Customer Voice
Family Thais Lead to Bangkok.com

Special Feature
An Outsourcing Mutual Admiration Society

Government Perspective
To Be Worth One's Salt

Modus Operandi: Conservative

Raising Prison Bars

Accounting for Results

Analyst Voice
Outsourcing's Little Dipper

A New Era for Outsourcing

Legal Voice
Changes in Accountability for eBusiness and Internet Initiatives

BPO Voice
The New BPO Mantra: Get In, Get Out

Hearing the Cries For Help

To compete in today's global marketplace, companies are outsourcing more and more of their non-core processes. I define outsourcing in my new book, Turning Lead Into Gold. The Demystification of Outsourcing (Executive Excellence Publishing, 2000) as the complete transfer of a process from a buyer to a vendor. However, how can buyers turn their backs on a process that's still crucial to their business - like financing and accounting or email services -- and still feel comfortable? The answer is to learn how to make your suppliers accountable.

Outsourcing works its magic if the buyer truly turns over the designated process to the supplier. The supplier and only the supplier can own the process if outsourcing is to turn lead into gold. That's because the supplier has access to technology you don't have, the ability to attract talent that you can't retain, and economies of scale that don't work with a multiple of one.

Buyers who tell their suppliers how to complete the process remove all the benefits inherent in an outsourcing relationship. After a careful search, you should have selected a supplier who is better at the process than you are because that's their core competency. Insisting on having things your way robs your supplier of the power of leverage and the advantage of assets.

Buyers can turn their backs on this process because they have the ability to hold their suppliers accountable for the promised results. Accountability has two pieces. Buyers must:

• Patrol the process boundaries.
• Establish objective metrics

Establishing process boundaries gives you the ability to settle disputes about who was supposed to do what. You don't have to worry about what you are supposed to do because it should be clear.

You Get What You Inspect, Not What You Expect

I'll admit it can be difficult to make process boundaries black and white. But that's exactly what we've done at our Outsourcing Exchange. Our consultants have clearly defined process boundaries for every business process. Buyers who opt to use our Outsourcing Exchange have this challenging job already completed for them.

Metrics form the other pillar of outsourcing accountability. As I said in my book, you get what you inspect, not what you expect. Metrics provide quantifiable and indisputable measures of performance, telling you if you got what you paid for.

Metrics and process boundaries, when combined, give you the ability to know you have received what was promised. They give shape to the discussions you have with your vendor.

But the existence of clear boundaries and meaningful metrics is not enough. There must be enforcement. If a vendor misses a metric, there should be a reimbursement.

Accountability cuts both ways. Outsourcing is not a free ride for buyers. If a buyer asks for a function that is outside the scope of the original outsourcing agreement, the buyer must pay extra for that work. And if the buyer withholds critical input to the outsourcing process requested by the vendor, any poor results are the buyer's fault. The vendor can not be penalized if the buyer refuses to cooperate.

The same consequences should apply to service level agreements (SLA). If a vendor guarantees 99 percent uptime, the buyer better get that. If the uptime percentage slips, the buyer should not have to pay for service it didn't receive.

The Changing Nature of Outsourcing

Today, the nature of outsourcing has changed and its primary emphasis has shifted. Before, buyers were intent on beating up their prospective vendors on price. Today, buyers chose to outsource to achieve goals they couldn't accomplish on their own. Now buyers are just as interested in receiving better service, having access to cutting edge technology and acquiring speed to market as well as a good price.

These gains are possible because outsourcing vendors are able to leverage their knowledge with a superior process. And buyers are able to turn their backs on these non-core tasks and concentrate on what distinguishes them in the marketplace because they have learned how to keep their suppliers accountable. As the title of my book suggests, this is how outsourcing turns lead into gold.

Lessons from the Outsourcing Primer:

• Buyers can not micromanage an outsourced process if they want to gain the benefits of outsourcing.
• Buyers must establish fair metrics and patrol process boundaries to hold their providers accountable.

Publish Date: November 2000

Copyright © 2000 - Everest Partners, L.P.

[Previous Story] [Next Story]

SPONSORS

ADS